[Click eStock] Korean Air Q1 Market Expectations Up... Strong Air Cargo Performance

[Asia Economy Reporter Myunghwan Lee] Daishin Securities announced on the 1st that it expects Korean Air to deliver earnings that surpass market expectations for the first quarter, maintaining a buy rating and a target price of 43,000 KRW. This is attributed to strong demand in the air cargo sector.

Daishin Securities forecasts the company's first-quarter sales this year to increase by 59.8% year-on-year to 2.8639 trillion KRW, and operating profit to surge by 494.4% year-on-year to 603.9 billion KRW. Breaking down the sales estimates by business segment, air cargo is expected to grow by 59% year-on-year to 2.1507 trillion KRW (+59%), and international passenger revenue to increase by 109.3% to 245.7 billion KRW.

Daishin Securities analyzed that this strong performance is due to high freight rates and steady demand in the air cargo sector. Despite the seasonal low period for air cargo, supply conditions remain tight, leading to historically high air cargo freight rates in the first quarter of this year. The surge in jet fuel prices caused by Russia's invasion of Ukraine also contributed to increased fuel surcharges, impacting the high freight rates.

Daishin Securities also expects the international passenger segment to show signs of recovery. From January to February this year, the average daily international passengers at Incheon International Airport were about 11,000. However, since the government's quarantine exemption for overseas arrivals starting on the 21st of last month, the daily average has recovered to between 15,000 and 17,000. Researcher Yang Jihwan of Daishin Securities stated, "Demand is rapidly increasing on tourist routes such as Hawaii, Guam, and Saipan, as well as long-haul routes to the Americas and Europe where quarantine requirements have been lifted," adding, "The full recovery of passenger demand is expected to occur when China and Japan lift quarantine measures for arrivals."

Researcher Yang noted, "Although the increase in cargo supply is limited due to demand growth on some routes," he emphasized, "the leverage effect from rising passenger load factors makes it highly likely that the company will achieve record-high profits this year."

This content was produced with the assistance of AI translation services.